Firing Attorney - Chapter 13 Post-Confirmation

[pyxis]

Is there any detriment to a Chapter 13 plan to fire an attorney post-confirmation? In short we are getting rid of him because he is rude and condescending to my wife and we can't deal with him anymore. Plus he wants to charge an extra $2700 in the plan to file a plan modification to keep our tax refund this year.

That is above the $1000 retainer we paid him and the $4000 he is getting currently though the plan. The 13 plan included $5000 for attorney's fees but he only filed for the $4000.

I just called his office to get an estimate of our attorney fees incurred since confirmation and it is estimated at around $1000, which I think is way too high.

We did have him do some work after confirmation but I believe it was due to his mistakes. We filed a plan with our property taxes included. But because he filed the paperwork with the wrong creditor address they were never notified and we didn't find this out until after our plan was confirmed. So we did have his paralegal look into it and the county has now correctly filed a claim.

So if we fire him, what happens? Will he file a claim with the court for the fees? Or will we get a bill and get a chance to pay him out of the plan. Either way I plan to dispute some of his charges because we handled alot of matters on our own by calling the trustee.

And I'll just end up trying to do the plan modification for the tax refund by myself.

Thanks for the tremendous amount of information on this site. It has helped us out a lot

[LadyInTheRed]

Before you fire your attorney, you should find another attorney who is willing to step in at this point. The new attorney can help you with the fee issues with the old attorney. You might find that it is more cost-effective to pay the $2,700 to your current attorney to modify the plan than it is to have a new attorney come in and deal with the attorney fee issues and modify your plan. It sounds like your attorney is a jerk and I understand you wanting to replace him. Just remember that it may cost you some money. Or, maybe it will just cost your unsecured creditors money. But, my guess is that you would have to come up with some cash up front to pay a retainer to the new attorney.

If I understand it right, you paid a $1,000 retainer to your current attorney and your plan provides for an additional $5,000 to be paid through the plan. He filed a claim for only $4,000. So, it sounds like the estimate he is giving you is the additional $1,000 to be included in the plan. He may have just given you an easy answer without actually looking at the time spent. He will have to file a claim for the additional $1,000. Have you discussed with him your concern regarding his fees? He should be able to give you a detailed description of the work he performed and how long it took. If he includes time to fix his mistake, you need to point that out to him. If his paralegal is doing most of the work, it is possible he doesn't realize there was a mistake to be fixed.

$6,000 for a Chap 13 is on the high side but not out of the range of normal, especially if there was a lien strip. It is normal for an attorney to charge an additional fee for a plan modification. If he were to modify the plan, the additional fee would probably be included in the modification and paid through the plan. Are you in a 100% plan? If not, whether your attorney gets paid $5,000 or $2,000 in the plan doesn't make a financial difference to you. If the money doesn't go to your attorney, it will go to your unsecured creditors instead.

[pyxis]

$6,000 for a Chap 13 is on the high side but not out of the range of normal, especially if there was a lien strip. It is normal for an attorney to charge an additional fee for a plan modification. If he were to modify the plan, the additional fee would probably be included in the modification and paid through the plan. Are you in a 100% plan? If not, whether your attorney gets paid $5,000 or $2,000 in the plan doesn't make a financial difference to you. If the money doesn't go to your attorney, it will go to your unsecured creditors instead.

We did have a lien strip and won that on a default judgment. And we are in a 0% plan. I don't mind paying the attorney what he is actually owed but he won't budge on the future legal expenses of $2700. That would be in addition to the $1000 he still has "left over" in the original plan payment. He basically told my wife to get another attorney if we don't want those fees included. That's when I asked for a detailed billing, but his paralegal emailed back saying they can't send a detailed billing due to the pending modification. It's just frustrating because with the estimated attorney's fees it almost isn't worth it to get back the tax refund. And we don't anticipate fighting to get our future tax refunds since we changed withholding before filing to pretty much break out even.

The wife was just diagnosed with a medical condition which requires lifelong treatment so it's just frustrating to deal with this attorney problem at the same time. And I'm afraid by calling to discuss this matter further I'm just piling on legal fees

Thanks for the reply

[justbroke]

Yes, changing your Chapter 13 attorney post-confirmation doesn't happen too often. The amount, $2,700 seems like alot. What was the itemization of that amount? I'm sure it's the amount to attend a confirmation hearing for the change, but that would cost about $200/hr x 2 hours = $400. Plus the time for his paralegal to update the plan should be $175/hr x 3 hours = $475. These are my numbers, and have no bearing on what is allowed in your District, but $1,000 to modify a confirmed plan seems about average.

A typical Chapter 13 is about $3K, and with a lien strip is $4K. The fact that you incurred costs after confirmation -- which is where most fee agreements start the per hour charges -- could make this $5K in actual "earned" fees for the attorney. In other words, the attorney may have actually earned the $5K already. I still don't like the additional $2,700 just to ask permission to keep a tax refund!

Also, you don't need a modification to keep a tax refund. Generally, there's a procedure with the Trustee to do so. In my District, you just send the Trustee the refund check with a letter ASKING to use the funds to spend on something NECESSARY. The Trustee then reviews the request and will "usually" return the refund if the request is approved.

[pyxis]

I wish it was that easy here. I looked at the local rules for my district and it states that requesting to keep tax refunds are actually plan modifications. I'll contact my trustee tomorrow to be sure. I've copied the local rule here.

I'm pretty sure I can handle the tax refund issue myself since no other plan modifications need to be done. I don't need to increase my plan payments or anything. I'll contact the pro se clerk and ask what needs to be done.

Guideline 6 Chapter 13 Post-Confirmation Motions to Excuse Plan Payments or Tax Refunds in Chapter 13 Cases and Plan Modifications:

Because post-confirmation motions to excuse plan payments or tax refunds in chapter 13 cases are actually plan modifications, for which the national and local rules establish a procedure, the Court will no longer consider such motions. Upon the filing of such a post-confirmation motion, the Court will enter an order denying it without prejudice to the debtor’s right to file a proposed plan modification.

Any such proposed plan modification shall:
(1) Be served as required by F.R.Bankr.P. 3015(g);
(2) Comply with LBR 3015-2(b);
(3) State with specificity the impact of the proposed plan modification on each class of
creditors;
(4) Be accompanied by a form “Notice of Deadline to Object to Chapter 13 Plan
Modification,” available on the Court’s website; and
(5) Be filed in ECF using the event, “Chapter 13 Post-Confirmation Plan Modification.”
If a timely objection is filed, the Court will set the matter for hearing and give notice of the hearing to the debtor, the proponent of the plan modification, the trustee and any objecting parties.
(Effective May 1, 2008)

[justbroke]

Actually, i think it's interesting that your District requires a plan modification in order to keep a tax refund. I personally think it's too much of the Court's time and expense to do so, but that's me.

I think Michigan is also the State where your plan time-line doesn't start until confirmation. In Florida, our time-line starts the day you file, so the 36 or 60 months is from the day you filed, not confirmation. Just goes to show how inconsistent the "local rules" can be!

[LadyInTheRed]

That's when I asked for a detailed billing, but his paralegal emailed back saying they can't send a detailed billing due to the pending modification.
[snip]
And I'm afraid by calling to discuss this matter further I'm just piling on legal fees

It's understandable that they can't give you a detailed billing for the modification. Either they are giving you a flat fee, which wouldn't require detail, or they are just giving you an estimate and any detail would be guesswork. But, if they told you they have already performed $1,000 worth of work since your 341, they should be able to give you the detail. Your attorney should not bill you for discussing his fees! If you call to discuss his fees, start the conversation by telling him you are calling him to discuss his fees and you don't expect to be billed for the conversation.

A typical Chapter 13 is about $3K, and with a lien strip is $4K.

I am paying $6300 for a Chap 13 with a lien strip. That's what all 3 attorneys I consulted with quoted. It wasn't a shock to learn that that is the "no look" fee in my district. I'm in the S.F. Bay Area where attorney fees are among the highest in the country, along with the cost of living in general. I don't know how attorney fees in Michigan compare to fees here. So, I should have said that $6000 isn't out of the range of normal in my area.

[newbie2]

Pyxis, I'm also in Michigan, so I will relate to you what occurred when we had a plan modification about 2 1/2 years in to our plan: We needed to excuse 2 payments because of an emergency so our attorney filed for a modification (couldn't do just a motion..). Our attorney did bill us an additional $325 for taking care of this for us, but the bill was sent to the trustees office and it was paid out of our plan. We also have received yearly statements from our attorney breaking down all additional costs / bills that were sent in to the trustees office. (All of them, with the exception of the modification, were for standard yearly reviews and amounted to right around $200). There is an objection period after the bills are submitted to the trustee in which one can object to the fees.

My understanding is that the attorneys have to submit the billings this way to the trustees and it (the bill) has to be approved by the trustee / judge.

Firing your attorney at this point may in fact be a wise idea. You are early in your plan, and you have a long way to go. Being comfy with the attorney that is going to be your advocate through the plan will go a long way to relieving your stress. If I were in your shoes I'd call a few other attorneys and ask them if they could take on something like this (post confirmation with a current attorney).

Good luck to you!

[Pandora]

In short we are getting rid of him because he is rude and condescending to my wife and we can't deal with him anymore.

Nip that in the bud first and foremost. I had to do this very thing with our attorney in the very beginning because he talked to me as if I was a 5 year old. The first time he did it..I let it slide...the second time he did it I sternly (but politely) told him I did not appreciate him talking down to me as if I were a child, he was hired to represent me including any questions/concerns I had that may arise through the course of our Ch. 13 plan. If he wanted to be treated the same in kind, then it's best he changed his tone when talking with me as I did not talk to him in that manner.

It worked... If you dont say something he will continue to do it and believe its okay.

[pyxis]

Pandora - we already had one discussion about the attitude before. I guess it didn't work.

Well the attorney made our choice easier. My wife called to talk about the attorney fees and they wouldn't even discuss it for some reason. One of the associates handling the case basically said take the modification as-is or get a new attorney. I don't get it we were being polite and not once complained about the fees until we got the modification letter in the mail from the attorney. All we wanted to know is how they estimated the $2700. The attorney was rude and said she spent days on the modification and we have to pay up. Wife said we don't require their services anymore. Now we'll wait for the bill and see what we get charged. I do have the email from a couple of days ago estimating attorney's fees around $1000 so hopefully they won't pad it up too much

Like I said we weren't trying to get out of paying anything. I know attorneys do a service and deserved to get paid for their work. All we just wanted a detailed breakdown and to discuss some fees we felt were should not be included.